Recommendations and Implementation Strategies Change in Brand Perception The products belonging to this category have always been

perceived as high price-high value. In order to truly engage with all the possible consumers it is imperative for these brands to position their products which subscribe to the same for less strategy. In order to effect a change in its value proposition, these companies need to effect a change in their product positioning strategy. The products in these firms new product line must be positioned as value-for-money where little or no compromise has been made in terms of product quality. This can be done in two ways- reducing price of the current offerings or maintaining the price levels but increasing the benefits for the customers. The first should not really be an option for these companies and they must pursue the second option. Thus, these firms must stress on innovative product development through the use of innovative production technologies and processes in order to create products that have an enticing value proposition for the customer base. They have to achieve this by increasing brand equity which is the extra monetary value the consumers are willing to pay to own a particular brand. This is a function of brand awareness, brand association, perceived quality and brand loyalty. Thus all steps must be followed to increase the aforementioned attributes. Brand Image and Customer loyalty A significant component of industry members strategy to increase market share is the strengthening of brand image and customer loyalty through marketing. Companies expend considerable effort and resources attempting to convince their customers that sneakers made by other companies are imperfect substitutes. Currently, Nike appears to have been the most successful in this endeavor, followed closely by the newly joined Adidas-Reebok entity with its two flagship brands. Nike s shoes are considered to be quality and stylish. Reebok s are comfortable and casual, and the Adidas brand boasts superior performance and is perceived as a professional, technically orientated brand with strong European roots . Smaller companies like Vans and DC shoes have succeeded in creating a strong brand image in the eyes of young skateboarders and extreme sports followers. Puma in the past was seen as the brand that mixes the influence of sport, lifestyle and fashion . The methods by which they accomplish this include various forms of advertising, social networking and associations with major events. Advertising These firms spend more than 10% of their sales in advertising. The figure shows the importance of advertising to these companies. Advertising is done both on traditional channels such as TV, print, hoardings, etc, as well as contemporary media such as the internet. Advertising leads to greater brand awareness as well as assoc iation of the advertising campaign with the brand.

This star marketing extends beyond the U. Thus two of the components of brand equity are enhanced through this activity. Thus having musicians as celebrities can also be an option so is having a person who is the role model in the current conditions. All this lead to a greater buzz for Adidas and the company which had flat (and almost declining) sales over the last three years is expected to have moderate growth in its topline and bottomline. This image has allowed Nike to differentiate its products from those of its competitors.S.4%. Thus having a Vijay Mallya or a Rahul Gandhi as an endorser in India is an option Major Events The companies can appeal to a large audience At once by getting associated with a major event such as the FIFA World Cup or the Olympics. In late 2005. The World Cup for example has a viewership of over 2. This leads to your brand getting greater visibility among a large number of viewers and also creates a brand association with that particular event. particularly Adidas. you guessed it. Reebok has an endorsement deal with Chinese NBA player Yao Ming. and Puma have with professional sportsmen. the Air Jordan line continues to be a huge source of profit and brand support for Nike. Nike spent over Rs 200 crore on endorsing an Indian cricket team. other firms have also utilized this technique. Argentina. According to a Nielsen survey. and made the team the world s most valued brand in team sponsorship . the footballs are Adidas-branded and televised ads for football apparel and equipment during matches can only be. The most famous of these company-player relationships is between Nike and Michael Jordan. Despite Jordan s retirement several years ago.com and myspace.Entertainment and Celebrity Marketing Campaigns Celebrity marketing campaigns are a key way in which athletic shoe makers seek to differentiate their brands and associate their shoes with professional athletes and other celebrities. Facebook. this created a buzz of 14. For example. While Nike has had the most success with basketball endorsements.com both have over 50 million subscribers and most of them belong to the target segment. for Adidas. whose image has thus far failed to break out of the realm of basic technical performance. Social Networking Social networking is the up and coming communication media which more and more players in all kinds of industries are getting into. This means the referees wear Adidas uniforms.5 billion and Adidas played it s tried and tested strategy of being the official FIFA sponsor for the World Cup games. These firms can look at targeting celebrities in other domains which appeal to the target group. Reebok. particularly Nike. Moreover. Thus it . Adidas. and into international borders. The most successful examples are the signature lines and endorsement contracts that firms. and Spain (all of which advanced to the quarter finals) were emblazoned with the Adidas logo. The success of the Jordan and other signature lines has been and continues to be instrumental in Nike s image as a stylish performance brand. Adidas is the official sponsor for 12 of the 32 teams playing in the World Cup so the uniforms of teams such as Germany.

Though Nike does not sell products under the Nike brand to discount retailers. In October 2005. Ikea. Having online presence and having well designed websites also gives a feeling of cutting edge technology. There are companies such as Brooks and Spira who choose to market their products almost exclusively to specialty running stores. which is a subsidiary of the Russell Corporation. a young company that makes running shoes with springs in the bottom. focuses on high-performance running shoes and considers itself the brand of choice among discerning runners of all abilities (www. they lack aesthetic appeal. For these companies this can quite easily achieved by having recycled packaging and have a green product line. also plans to use this type of distribution decision to market its shoes. These companies are at the top of the Interbrand listings in terms of value of brand name. Brooks Sports. In addition to this you reach the consumers you want to reach. Distribution Retail Firms also make decisions regarding the distribution of their shoes in line with the brand image they wish to maintain. Nike refuses to sell its flagship brand to low cost retailers. Sears will continue to carry products from Adidas. It therefore makes sense for a Nike or an Adidas to showcase them to be a carbon neutral company or a company having immense transparency. Nike stopped selling to Sears in response to its merger with Kmart. New Balance. Reebok. Through social networking you can reach your customers cheaper and the CPM (cost per mils) is significantly lower. The CSR card These companies can improve their brand image further by simply showing themselves to be socially responsible. Examples of companies who have used the same strategy include Coke. These were both started in conjunction with the FIFA World Cup which had Adidas as its official sponsor. etc. At the same time the companies also have to show themselves to be maximizing shareholder value thus coming across as attractive investment options and thus improving the financial standing for the company.brooksrunning. This would be beneficial not only to the top line but would also add to the brand equity of the company. The absence on this medium of any of the firms would essentially be a handicap for them.would be an ideal opportunity for the company to efficiently reach the people it actually wants to sell its product to. In fact Nike has been using this medium effectively over the years with campaigns such as Joga Bonito and Write the Future. Thus there are people who believe that social networking is probably more effective in this segment than the traditional advertising mechanism. and Sketchers. Spira Footwear. Another medium is youtube. . Nike not wanting to be left behind started these campaigns which were immensely successful and created greater buzz (30% as per AC Nielsen) than Adidas over the period. Despite that their shoes are revolutionary. it does target some of its other brands toward that market.com which has over 150 million users.com).

The companies through Global Brands are determined to address every consumer in a specific and unique way with product initiatives that generate trade and consumer interest. Jim Davis. The companies can target rookies and give them free shoes and this will undoubtedly get their loyalty once they become Pros and could help build a company s brand image. Nike pioneered this venue with the introduction of the NikeID service in the spring of 2005 which allows customers to personalize their shoes. The companies have to ensure that they have proper retail space management mechanisms to drive efficiency. Grassroots Marketing Companies also seek to attract new customers and cultivate customer loyalty by introducing young athletes to products that fit their particular needs. According to a Commerzbank report it is estimated that 90% of the European youth buy a new athletic wear product every year. This dynamic is also part of Nike s justification for its World Cup ad campaign and determination to take the soccer market from Adidas. This not only creates usage for their product but also leads to positive word of mouth from the users and eventually lead to greater sales for that company. and the overall fit of the shoe. has suggested that the company needs to establish itself in the small stores where people explain the technology .com). The firms believe the products will market themselves on the basis of their quality and suitability to the wearer. materials. This has tremendous scope and could be the way next gen customers purchase their sports shoes. add a wide variety of logos and images to the shoes (NikeID. This could include usage of mono brand franchises and programs such as NOOS(Never out of stock. the weight of the cleats. Nike ID allows buyers to choose their own colors. notes that the objective of the acquisition is to work with coaches to get kids in the right shoes. Soccer is considered an important gateway to brand loyalty with children worldwide . etc. and in some cases.The company s CEO. Innovation and New Product Development The companies have to realize that innovation is a must in certain saturated markets such as North America and Europe. The new +F50 Tunit line allows the customer to customize the weight of the shoe chassis. Adidas has also begun using this method in its soccer cleats. . This will not only lead to greater customer satisfaction but also a chance to charge a premium to customers. Andy Krafsur. New Balance made the most use of this technique. This is one of the major reason companies become official kit suppliers to local club teams. It is imperative for these companies to develop products that will induce buying behaviour from the existing users.) Online Model-Personalization One unique distribution tactic that has entered the market place in the last few years is allowing customers to design their own shoes. The company s founding chairman. and after we hope that they become loyal customers . Of the major shoe competitors. They used this strategy in their 2004 acquisition of Warrior Lacrosse.

and it is an Adidas goal to be the most personal sports brand by 2015. By creating inspiring product and brand experiences. This. these players strive to enhance their positions as premium brands. The Free is meant to be used as a training tool to strengthen runners feet. innovation plays a significant role in differentiating their product offerings in the minds of consumers. Fashion companies are one substitute that can easily be countered through this strategy and these companies could possibly come up with shoes with tie-ups with up and coming designers. The companies have to constantly come up with new products to keep up with the competition or they end up giving a competitor a free rein. is an important product because it indicates a shift in the way Nike views the interaction between their products and their consumers. with aforementioned acquisitions of Umbro and Converse by Nike. and so on. To . The entering firms which are successful and gain significant market share pose a threat to the larger players. Consolidation Larger incumbents can control entry by acquiring smaller companies. innovation focus is on fitness and training. These new technologies can then be introduced into lower priced footwear and other types of sneakers to help companies maintain their presence in different market segments or break into new ones. is an important catalyst to sustaining and improving the brands gross margins. therefore making continuous innovation an important enabler for future profitability improvements. The Nike Free. By leveraging the extensive R&D expertise within their companies. the incumbent players continuously challenge the boundaries of functionality and performance. Keeping up with Competition For many performance brands. Another example is the Adidas 1 which had a built in microchip and was priced at $250 at launch. it is important to sell products based on the latest technology in order to have a competitive product in the top of-the-line market. The athletic shoe industry has seen considerable consolidation of late. which lets runners feel as if they are running barefoot. in turn. In addition. personalisation is one of the brand s lead innovation concepts. For example at Adidas. Reebok by Adidas. where a current priority is creating products that provide a material benefit to the consumer in terms of muscle toning and conditioning. This hi-tech shoe will likely reinforce Adidas image as a firm at the forefront of athletic technology.The general belief is that technological innovation is essential to sustainable leadership in this industry. New Products and Brand Image New products can also enhance the image of a brand. a full $100 premium over its competitor Nike Max Air 360. Athletico-Fashion The companies have to come up with products which are lie in the intersection of the athletics and the fashion category to have a greater say in the parallel market of fashion. At Reebok.

talking billboard that happens to be a spokesman for Nike. In addition. but also the whole of China and other Asian nations. The consumers would be willing to pay a greater amount for the same product if the product belongs to a particular product line. and cater to the lower income groups which can open up new vistas of business opportunity for the organization. The acquisitions allow the buying firms to reap benefits through both increased scope and also association with the latest trends in footwear. Japan. Another outcome of this strategy could be the cost premium that one would extract due to these. Thus other companies can take a leaf out of Nike s book and create product lines in the same way. Jordan himself is responsible for the propagation of the brand endorsed by him. the greater the spurt in sales of the Air-Jordan brand. the company needs to look at other potential ambassadors such as upcoming NBA superstar Yao Ming. the consumers feel that they can come that much closer to their icon. with a fan following which spans not just the United States. The companies have to ensure that in these countries the focus is on expanding the pie rather than fighting for the existing market. South East Asia and India. The bigger firms essentially make it almost impossible for new entrants to grow too much without investing huge sums of money. While the appeal of sportsmen of the class of Jordan and Woods are universal. The incumbents have large enough budgets so that they can simply buy these smaller firms. Jordan is everything they hope to be and by buying the product endorsed by him. This offers tremendous potential as the firm gets greater sales and greater brand equity through enhanced brand association. perceived quality and awareness. the bigger players preemptively acquire smaller sneaker companies before these grow too big and become competitors with similar footing in the industry. As much as Nike may promote the superstar and the product he represents. rather than risking a subsequent loss in market share. Thus we can summarize as follows: Asia: To expand the business in the most important markets China. Thus the firms have to build the market and lead it to its true potential. New Geographies Going forward. He is like a walking. it needs to come out of the cocoon of high end product image which it has built for its brand. these companies must realize that the future is a global game with booming economies such as the BRIC nations with growing purchasing power parities. The more Jordan plays in front of a packed audience. To the target market. Some potential entrants notice this tendency and want to remain independent and simply choose to look at alternative business opportunities. The Air-Jordan brand of shoes from Nike is marketed with the image of Michael Jordan at the fore.prevent such a scenario. . As stated earlier this can be achieved by creating a perception of higher value. Use of Player Inspired Brand Lines A strategy that has so far only been utilized by Nike has been the player inspired brand lines.

"adidas.com/stock/Nike_(NKE)#_note-abc £¤ ¢  ¡  £ .L ti A Ar ti App ri xi Ex hi usi ss i th st i rt t r ts r i dic : r t h r s s 7 Ath ti F tw r Chri toph Doll chal. Commerzbank. 28 February 2008 Global Footw ar Mar t 2002-06 Courtesy: http://www." Equity Research.wikinvest.

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